The war in Ukraine and the ratcheting up of sanctions on Russia will have knock-on effects on the rest of the emerging world mainly through its impact on supply chains and commodity prices. Some EMs (e.g. Gulf oil producers) stand to benefit from higher prices. But higher food and energy prices will also push up EM inflation, perhaps by 0.5-1.0%-pts, and trigger further monetary tightening, particularly in Central Europe and Latin America. Meanwhile, continued investor risk aversion could put Turkey’s economy under further strain and heighten sovereign debt risks in some smaller frontier markets.
EM Drop-In (Thur. 3 March, 15:00 GMT) We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.
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